Free Market Capitalism Research Paper
Free Market Capitalism
History of Capitalism
Free Market Capitalism emerged in the mid to late 1700's and grew in popularity and strength as individuals realized the benefits specialization and trade and antiquated infrastructures began to grow increasingly more capable and efficient. Improvements in travel and transportation, the monetization of individuals and the softening of attitudes towards the promise of a market based system were important obstacles that needed to be overcome before a region could progress under a free market system. Therefore, regions developed at a very uneven pace over the past several hundred years.
The road to free market capitalism has not always been a smooth one. A system where every man is primarily …show more content…
responsible for their own success or failures, yet are completely dependent on each other for survival has some inherent problems such as a propensity for greed and the exploitation of the weak. Market inefficiencies were often great due to lack of rapid communication, regulations, and government interference. Individuals in the past had to rely on their own common sense and had little means for comparison. As competition grew and the flow of information increased, markets became increasingly more efficient.
The birth of the industrial revolution catapulted capitalism to the forefront of economic thought. The mechanical advances, mass production and profits it generated were tremendous and intoxicating. Industrialized nations began on a whirlwind of growth and prosperity. This mass production fostered the creation of societies made up of many interdependent channels that rely on each other for survival. This interdependence was a large shift from the days of self sufficient farmers that provided nearly all of the food and goods the family needed and had little use for markets.
The era of the great depression was a catastrophic setback for free market capitalism as growth and investment came to a halt. Many lessons were learned from these events by governments, individuals and companies alike. The system proceeded but more slowly and with a great deal more caution. Many initiatives and laws were put in place to help prevent a future occurrence.
Today Free Market Capitalism is in full swing. Our entire economy is dependent on it in some way and the idea of a self sufficient individual is nearly extinct. Markets are heavily regulated and analyzed by millions of groups for many different reasons. A system of checks and balances governs the actions of the market system ensuring for the fair and equitable trade of goods and services. In addition, we are in the midst of a technological revolution. The entire way in which business is transacted is evolving thanks to a massive global, technological infrastructure and the internet.
Trends
Globalization and the emergence of an international capitalism structure:
As Capitalism expands and commerce goes global, it is undergoing a huge transformation and encountering a new host of opportunities, benefits, obstacles and shortcomings. The world's doors are opening up like never before and the task of navigating the differences in culture, governments, currencies and individual perceptions is immense for each nation. The internet has created communication channels across the globe allowing even small companies to do business internationally.
A large constituency of capitalists believes that capitalism will serve as a platform for evolving the worlds less developed nations and indeed, to some extent, it is. The free flow of information, skills, labor, technology and other resources from one nation to another has a tendency to lift developing nations as a whole by providing jobs, money and new ideas and processes. The benefit to developed nations is primarily financial and is realized in less expensive labor and materials etc.
The call for "Conscious Capitalism: - A return to values:
In recent years, Capitalism in the United States has fallen under scrutiny for its inherent greed, ignorance, and apathy with regard to social issues such as poverty and the environment. The past decade has been riddled with scandals that rocked some America's largest corporations. The actions of executives at Enron, Adelphia, and The World Bank have strengthened many Americans fear that corporations are solely profit seeking institutions with little regard to the consequences of their actions and the opinions of their sole reason for existence Their customers. The exorbitant rise in executive salaries, lack of responsible actions of executives, destruction of the environment and elimination of American jobs in favor of less expensive foreign labor has left us to question what are these corporations giving back?
Patricia Aburdene, author of Megatrends 2010', lists "The Dawn of Conscious Capitalism" number 2 on her list of today's hottest trends and says an interview with The Christian Science Monitor:
We've now become conscious of the uncalculated social, economic and environmental costs of that kind of "unconscious" capitalism. And many are beginning to practice a form of "conscious capitalism" which involves integrity and higher standards, and which companies are responsible not just to shareholders, but to employees, consumers, suppliers and communities. Some call it "stakeholder capitalism"
In an era of heightened public consciousness, and an abundance of information thanks to the internet, there has been an increased pressure on companies and governments to "do the right thing" so to speak. This call to consciousness serves as a wake up call to those who pursue growth and profits without concern for the bigger picture. This pressure has resulted in an increase in philanthropy, in new "green" technologies that are a win-win for companies and consumers, new initiatives to give back to the people. Companies are starting to realize the benefits, profit potential, and positive press in appealing to the values conscious customer. An example is the hybrid car. As growing concerns about the environment mount, companies are providing a product that serves the needs of individuals and comes with a "feel good" bonus.
Challenges and opportunities
Can capitalism and globalization save the world?
Proponents of capitalism claim that globalization is good for the developing nations and the world as a whole in that it brings commerce, education, jobs and money into economies that desperately need it improving the lives of the people. Opponents, however, say that although this is partly true, the increase in day to day quality of life, particularly the uneducated poor is changed very little by globalization. If a country or area has little to offer, it is overlooked by capitalism and often times, so too are its people. In this respect, capitalism, without external intervention, will continue on a path of globalization that seizes only the most profitable opportunities first and trickles down from there.
Capitalism has at its core it is based on drive and opportunity which leaves areas in which free market capitalism can be inefficient. In particular, the continual drive for increased production increased profits, and cost savings lends itself to being insensitive to issues such as poverty, quality of life, and the environment. Many criticize capitalism for exploiting labor and resources at all costs for the sake of profit and believe it will do little to solve the problems of developing nations and the worlds poor. In fact, many people believe it will do more harm than good and strip out a regions precious resources leaving its people with less than before. Doug Schuler, in his article about global capitalism says "The basis of uneven development is that international exchange is inherently unequal and that international capitalism through foreign trade and investment tends to exploit the underdeveloped world".
Can companies practice conscious capitalism and still be profitable?
Yes! Many CEO's such as Whole Foods CEO John Mackey believe, and have demonstrated that conscious capitalism is actually good for business; that encompassing an everybody contributes, everybody wins attitude and putting the focus where it should be: on the product or service and not on the shareholders returns, companies actually thrive. In a letter on the subject he posted to the public, John speaks to the current problem faced in most corporations today: "Unfortunately, current business thinking does not easily grasp systems interdependencies, and therefore often lacks ecological consciousness or a sense of responsibility for other constituencies, or other stakeholders, besides investors .concluding that maximizing profits is the only important goal of business". His business model has been praised for its forward thinking as well as its success. The model is working. According to John, "The best way to maximize long-term shareholder value is to simultaneously optimize the value for all other constituencies. The health of the entire system is what really matters"
Can individuals effect mass change on the economy?
Yes! They can and do everyday. The internet has made more opportunities for individuals to get involved than ever before in history. People can join groups that effect mass leverage and change on companies and governments. Environmental lobbies, trade organizations, non profit groups etc. can and are making a difference with the support and participation of individuals across the world.
Solutions
Individual call to action:
The information age and in particular, the internet has provided individuals the ability to get informed and stay informed more than any other time in our history.
The availability of information has provided individuals the opportunity and responsibility to monitor and get involved in the actions of corporations, governments, charities, non for profit organizations etc. The potential to effect change on the economy has been forever changed. People now have the ability to communicate with one another across the globe, to make their opinions known and to join forces to raise awareness and encourage the actions of others including corporations and …show more content…
governments.
Understanding capitalism:
In the early days of capitalism, the lack of information and understanding of market movements along with poor communication channels led to meltdowns of the system with devastating effects and often without prior warning. Today, technology has provided us the ability to intensely monitor actions and trends in our economies and can provide early warning signs for potential concerns that may be mitigated by preventative and/ or corrective actions. As globalization continues, the need for the collection and analysis of information and trends is more important than ever before. Globalization cannot and should not be allowed to progress with only a profit seeking mindset alone. Globalization at a safe speed, so as to allow time for market reactions and adjustments promises vast opportunities and the emergence of a new, evolved face of capitalism.
Continued emphasis on the true costs of capitalism:
In the past, many corporations had a very narrow view of their purpose, goals and effects on the world as a whole.
With the emergence of a global economy, there is a new age of awareness taking place and a call to action on corporations to take a new, expanded approach to the way they do business. Companies are realizing the effects of acting or appearing overly greedy or anti-philanthropic.
Capitalizing on the right to vote:
It's never more apparent than in times of turmoil, how important an individual's right to vote is. It is at least one guaranteed opportunity to effect change on the policy of our government and the corporations and others that answer to it. Americans must not take this right for granted.
References
A. Allen Butcher 1992 - Democracy and Capitalism Are They Critical Elements of a Climax Human Culture?
www.progressiveliving.com
Conscious capitalism: Now creed is good
BBC News Ecylcopedia
May 4, 2000
John Mackey, cofounder and CEO of Whole Foods - Conscious Capitalism: Creating a New Paradigm for Business www.wholefoods.com/blogs/jm/archives/2006 /11/coscious_capit.html
November 2006
Jane Lampman - Trend-watcher sees moral transformation of capitalism
The Christian Science Monitor
October 3, 2005 edition
Doug Schuler - Examining the Pros and Cons of Global Capitalism
The Magazine of Rice University
Fall 2005 Vol.62, NO.1
History of Capitalism
Free Market Capitalism emerged in the mid to late 1700's and grew in popularity and strength as individuals realized the benefits specialization and trade and antiquated infrastructures began to grow increasingly more capable and efficient. Improvements in travel and transportation, the monetization of individuals and the softening of attitudes towards the promise of a market based system were important obstacles that needed to be overcome before a region could progress under a free market system. Therefore, regions developed at a very uneven pace over the past several hundred years.
The road to free market capitalism has not always been a smooth one. A system where every man is primarily …show more content…
responsible for their own success or failures, yet are completely dependent on each other for survival has some inherent problems such as a propensity for greed and the exploitation of the weak. Market inefficiencies were often great due to lack of rapid communication, regulations, and government interference. Individuals in the past had to rely on their own common sense and had little means for comparison. As competition grew and the flow of information increased, markets became increasingly more efficient.
The birth of the industrial revolution catapulted capitalism to the forefront of economic thought. The mechanical advances, mass production and profits it generated were tremendous and intoxicating. Industrialized nations began on a whirlwind of growth and prosperity. This mass production fostered the creation of societies made up of many interdependent channels that rely on each other for survival. This interdependence was a large shift from the days of self sufficient farmers that provided nearly all of the food and goods the family needed and had little use for markets.
The era of the great depression was a catastrophic setback for free market capitalism as growth and investment came to a halt. Many lessons were learned from these events by governments, individuals and companies alike. The system proceeded but more slowly and with a great deal more caution. Many initiatives and laws were put in place to help prevent a future occurrence.
Today Free Market Capitalism is in full swing. Our entire economy is dependent on it in some way and the idea of a self sufficient individual is nearly extinct. Markets are heavily regulated and analyzed by millions of groups for many different reasons. A system of checks and balances governs the actions of the market system ensuring for the fair and equitable trade of goods and services. In addition, we are in the midst of a technological revolution. The entire way in which business is transacted is evolving thanks to a massive global, technological infrastructure and the internet.
Trends
Globalization and the emergence of an international capitalism structure:
As Capitalism expands and commerce goes global, it is undergoing a huge transformation and encountering a new host of opportunities, benefits, obstacles and shortcomings. The world's doors are opening up like never before and the task of navigating the differences in culture, governments, currencies and individual perceptions is immense for each nation. The internet has created communication channels across the globe allowing even small companies to do business internationally.
A large constituency of capitalists believes that capitalism will serve as a platform for evolving the worlds less developed nations and indeed, to some extent, it is. The free flow of information, skills, labor, technology and other resources from one nation to another has a tendency to lift developing nations as a whole by providing jobs, money and new ideas and processes. The benefit to developed nations is primarily financial and is realized in less expensive labor and materials etc.
The call for "Conscious Capitalism: - A return to values:
In recent years, Capitalism in the United States has fallen under scrutiny for its inherent greed, ignorance, and apathy with regard to social issues such as poverty and the environment. The past decade has been riddled with scandals that rocked some America's largest corporations. The actions of executives at Enron, Adelphia, and The World Bank have strengthened many Americans fear that corporations are solely profit seeking institutions with little regard to the consequences of their actions and the opinions of their sole reason for existence Their customers. The exorbitant rise in executive salaries, lack of responsible actions of executives, destruction of the environment and elimination of American jobs in favor of less expensive foreign labor has left us to question what are these corporations giving back?
Patricia Aburdene, author of Megatrends 2010', lists "The Dawn of Conscious Capitalism" number 2 on her list of today's hottest trends and says an interview with The Christian Science Monitor:
We've now become conscious of the uncalculated social, economic and environmental costs of that kind of "unconscious" capitalism. And many are beginning to practice a form of "conscious capitalism" which involves integrity and higher standards, and which companies are responsible not just to shareholders, but to employees, consumers, suppliers and communities. Some call it "stakeholder capitalism"
In an era of heightened public consciousness, and an abundance of information thanks to the internet, there has been an increased pressure on companies and governments to "do the right thing" so to speak. This call to consciousness serves as a wake up call to those who pursue growth and profits without concern for the bigger picture. This pressure has resulted in an increase in philanthropy, in new "green" technologies that are a win-win for companies and consumers, new initiatives to give back to the people. Companies are starting to realize the benefits, profit potential, and positive press in appealing to the values conscious customer. An example is the hybrid car. As growing concerns about the environment mount, companies are providing a product that serves the needs of individuals and comes with a "feel good" bonus.
Challenges and opportunities
Can capitalism and globalization save the world?
Proponents of capitalism claim that globalization is good for the developing nations and the world as a whole in that it brings commerce, education, jobs and money into economies that desperately need it improving the lives of the people. Opponents, however, say that although this is partly true, the increase in day to day quality of life, particularly the uneducated poor is changed very little by globalization. If a country or area has little to offer, it is overlooked by capitalism and often times, so too are its people. In this respect, capitalism, without external intervention, will continue on a path of globalization that seizes only the most profitable opportunities first and trickles down from there.
Capitalism has at its core it is based on drive and opportunity which leaves areas in which free market capitalism can be inefficient. In particular, the continual drive for increased production increased profits, and cost savings lends itself to being insensitive to issues such as poverty, quality of life, and the environment. Many criticize capitalism for exploiting labor and resources at all costs for the sake of profit and believe it will do little to solve the problems of developing nations and the worlds poor. In fact, many people believe it will do more harm than good and strip out a regions precious resources leaving its people with less than before. Doug Schuler, in his article about global capitalism says "The basis of uneven development is that international exchange is inherently unequal and that international capitalism through foreign trade and investment tends to exploit the underdeveloped world".
Can companies practice conscious capitalism and still be profitable?
Yes! Many CEO's such as Whole Foods CEO John Mackey believe, and have demonstrated that conscious capitalism is actually good for business; that encompassing an everybody contributes, everybody wins attitude and putting the focus where it should be: on the product or service and not on the shareholders returns, companies actually thrive. In a letter on the subject he posted to the public, John speaks to the current problem faced in most corporations today: "Unfortunately, current business thinking does not easily grasp systems interdependencies, and therefore often lacks ecological consciousness or a sense of responsibility for other constituencies, or other stakeholders, besides investors .concluding that maximizing profits is the only important goal of business". His business model has been praised for its forward thinking as well as its success. The model is working. According to John, "The best way to maximize long-term shareholder value is to simultaneously optimize the value for all other constituencies. The health of the entire system is what really matters"
Can individuals effect mass change on the economy?
Yes! They can and do everyday. The internet has made more opportunities for individuals to get involved than ever before in history. People can join groups that effect mass leverage and change on companies and governments. Environmental lobbies, trade organizations, non profit groups etc. can and are making a difference with the support and participation of individuals across the world.
Solutions
Individual call to action:
The information age and in particular, the internet has provided individuals the ability to get informed and stay informed more than any other time in our history.
The availability of information has provided individuals the opportunity and responsibility to monitor and get involved in the actions of corporations, governments, charities, non for profit organizations etc. The potential to effect change on the economy has been forever changed. People now have the ability to communicate with one another across the globe, to make their opinions known and to join forces to raise awareness and encourage the actions of others including corporations and …show more content…
governments.
Understanding capitalism:
In the early days of capitalism, the lack of information and understanding of market movements along with poor communication channels led to meltdowns of the system with devastating effects and often without prior warning. Today, technology has provided us the ability to intensely monitor actions and trends in our economies and can provide early warning signs for potential concerns that may be mitigated by preventative and/ or corrective actions. As globalization continues, the need for the collection and analysis of information and trends is more important than ever before. Globalization cannot and should not be allowed to progress with only a profit seeking mindset alone. Globalization at a safe speed, so as to allow time for market reactions and adjustments promises vast opportunities and the emergence of a new, evolved face of capitalism.
Continued emphasis on the true costs of capitalism:
In the past, many corporations had a very narrow view of their purpose, goals and effects on the world as a whole.
With the emergence of a global economy, there is a new age of awareness taking place and a call to action on corporations to take a new, expanded approach to the way they do business. Companies are realizing the effects of acting or appearing overly greedy or anti-philanthropic.
Capitalizing on the right to vote:
It's never more apparent than in times of turmoil, how important an individual's right to vote is. It is at least one guaranteed opportunity to effect change on the policy of our government and the corporations and others that answer to it. Americans must not take this right for granted.
References
A. Allen Butcher 1992 - Democracy and Capitalism Are They Critical Elements of a Climax Human Culture?
www.progressiveliving.com
Conscious capitalism: Now creed is good
BBC News Ecylcopedia
May 4, 2000
John Mackey, cofounder and CEO of Whole Foods - Conscious Capitalism: Creating a New Paradigm for Business www.wholefoods.com/blogs/jm/archives/2006 /11/coscious_capit.html
November 2006
Jane Lampman - Trend-watcher sees moral transformation of capitalism
The Christian Science Monitor
October 3, 2005 edition
Doug Schuler - Examining the Pros and Cons of Global Capitalism
The Magazine of Rice University
Fall 2005 Vol.62, NO.1